Investors shifted their preference to favor small-cap securities over large-cap

The Health Care and Technology sectors contributed positively to the fund’s performance

Stock selection drove most of the positive returns for the fund

Looking back

During the first quarter of 2018, the U.S. economy maintained its positive momentum with continued employment gains, strong readings from the U.S. Purchasing Managers Index and interest rates increased from the fourth quarter. Most global equity markets were negative throughout the quarter. The U.S. equity markets were led by the Nasdaq Index, which was up 2.6%, followed by small-cap stocks represented by the Russell 2000 Index, down 0.08%, followed by mid-cap stocks represented by the Russell Mid Cap Index and large-cap stocks represented by the Russell 1000 Index, both down 0.69% during the quarter. Mid-cap growth stocks also outperformed mid-cap value stocks, continuing the trend throughout last year.

During the quarter, the portfolio team added the following equity positions: Illumina, The Bank of New York Mellon Company, Gates Industrial Corp, Pagseguiro Digital and Hudson Ltd. Also during the quarter, the portfolio subtracted the following positions in pursuit of better opportunities: Nektar Therapeutics, Martin Marietta Materials, Gates Industrial Corp. and Mohawk Industries.

Performance

Federated Kaufmann Fund Institutional Shares returned 9.22% at NAV for the three months ended March 29, 2018. That compares with its benchmark, the Russell Mid-Cap Growth Index, which returned 2.17% during the same period.

Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than what is stated. Other share classes may have experienced different returns than the share class presented. To view performance current to the most recent month-end and for after-tax returns, click on the Performance tab.

Click the Performance tab for standard fund performance.

Performance contributors

Stocks that made a positive contribution to performance included Veeva Systems Inc, Nektar Therapeutics, ServiceNow, arGEN-X, Workday Inc. and Splunk

Click on the Portfolio Characteristics tab for the fund’s top 10 holdings.

As the U.S. economy enters the second quarter of 2018, the positive economic momentum continues, U.S. business confidence remains high, along with consumer confidence, jobless claims are near a generational low and the ISM Manufacturing Index is at record levels as well. Earnings growth is expected to be the driving force behind the equity markets as tax reform and U.S. GDP growth support profit growth. Global markets face some new headwinds with trade discussions grasping the headlines. The Kaufmann funds continue to be focused in those sectors that have little dependence on the economy improving significantly to generate significant earnings growth.

For the first quarter of 2018, the fund had approximately 75% of the portfolio invested in four sectors: Information Technology, Health Care, Consumer Discretionary and Industrials. The sector weightings of the portfolio are a byproduct of our bottom-up stock selection strategy with a team of sector-specialist portfolio managers. We seek to find companies that have company-specific catalysts for growth rather than develop macro themes to construct sector weightings. These sectors also have historically provided good opportunities for bottom-up growth investors.

Key Investment Team

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Investors should carefully consider the fund's investment objectives, risks, charges and expenses before investing. To obtain a summary prospectus or prospectus containing this and other information, contact us or view the prospectus provided on this website. Please carefully read the summary prospectus or prospectus before investing.

Mutual funds are subject to risks and fluctuate in value. Click on Performance for fund specific risks.